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Section 1: 8-K (8-K, CHCO 4Q2018 EARNINGS)

Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported)
January 24, 2019 

396491858_image1.jpg

CITY HOLDING COMPANY
(Exact Name of Registrant as Specified in its Charter)

Commission File Number: 0-11733

West Virginia55-0619957
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
 
25 Gatewater Road, Cross Lanes, WV 25313
(Address of Principal Executive Offices, Including Zip Code)
 
304-769-1100
(Registrant’s Telephone Number, Including Area Code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
xWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨



 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On January 24, 2019, City Holding Company (“the Company”) issued a news release, attached as Exhibit 99.1, announcing the Company’s earnings results for the fourth quarter ended December 31, 2018. Furnished as Exhibit 99.1 and incorporated herein by reference is the news release issued by the Company.

Section 9 - Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 News Release issued January 24, 2019 

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the Undersigned hereunto duly authorized.


City Holding Company
  
  
By: /s/ David L. Bumgarner
 David L. Bumgarner
 Chief Financial Officer

Date: January 24, 2019 

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Section 2: EX-99.1 (EXHIBIT 99.1, PRESS RELEASE CHCO 4Q2018 EARNINGS)

Document

 NEWS RELEASE

For Immediate Release
January 24, 2019

For Further Information Contact:
Charles R. Hageboeck, Chief Executive Officer and President
(304) 769-1102

City Holding Company Announces Annual Earnings

Charleston, West Virginia – City Holding Company (“Company” or “City”) (NASDAQ:CHCO), a $4.9 billion bank holding company headquartered in Charleston, West Virginia, today announced net income of $70.0 million and diluted earnings of $4.49 per share for the year ended December 31, 2018. The results for the year ending December 31, 2018, include $13.3 million, or $0.67 diluted per share on an after tax basis, of acquisition and integration expenses related to the acquisitions of Poage Bankshares, Inc. (“Poage”) and its principal banking subsidiary, Town Square Bank of Ashland, Kentucky, and Farmers Deposit Bancorp, Inc. (“Farmers Deposit”) of Cynthiana, Kentucky and its principal banking subsidiary, Farmers Deposit Bank of Cynthiana, Kentucky, which were completed on December 7, 2018.

Highlights of the Company’s performance and results for the year ended December 31, 2018 include the following:

Return on assets and return on tangible equity of 1.63% and 16.2%, respectively. Excluding the acquisition and integration expenses, return on assets and return on tangible equity would have been 1.87% and 18.6%, respectively.
Reported net interest income increased $12.1 million (9.6%) from the year ended December 31, 2017, while net interest income exclusive of accretion from fair value adjustments on recent acquisitions increased $12.6 million (10.1%) from the year ended December 31, 2017.
Reported a recovery of loan loss provision of $2.3 million for the year ended December 31, 2018, primarily due to a significant recovery from a commercial customer.
Excluding the acquisitions of Poage and Farmers Deposit, total loan growth of $98.4 million (3.1%) from December 31, 2017 to December 31, 2018.
During 2018, the Company repurchased 290,000 common shares at a weighted average price of $69.78 per share as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. The Company still ended 2018 with a tangible equity ratio of 10.0%.
Received the highest ranking in customer satisfaction in the north central region in J.D. Power’s 2018 U.S. Retail Banking Satisfaction Study.
Charles “Skip” Hageboeck, Chief Executive Officer & President, was named Community Banker of the Year by the American Banker.

Highlights of the Company’s fourth quarter performance include the following:

Return on assets and return on tangible equity of 0.96% and 9.6%, respectively. Excluding the acquisition and integration expenses, return on assets and return on tangible equity would have been 1.88% and 18.8%, respectively.
Reported net interest income increased $0.9 million from the quarter ended September 30, 2018, while net interest income exclusive of accretion from fair value adjustments increased $0.6 million from the quarter ended September 30, 2018.



Excluding the acquisitions of Poage and Farmers Deposit, total loan growth of $79.1 million (10.1% annualized) from September 30, 2018 to December 31, 2018.
Repaid $16.5 million of Junior Subordinated Deferrable Interest Debentures issued by the Company and held by City Holding Capital Trust III at a price of 100.00% of principal.
Completed the acquisitions of Poage and Farmers Deposit on December 7, 2018.
Opened a new banking office in the Columbus suburb of Worthington, Ohio in December 2018.

City’s CEO Charles Hageboeck stated that, “2018 was a very successful year for City with reported earnings of $4.49 per diluted share, despite merger related expenses of $13.3 million ($0.67 per diluted share on an after tax basis). Excluding these costs, earnings for 2018 would have been $5.16 per diluted share. As a result of the acquisitions of Poage and Farmers Deposit, we were able to strengthen our market presence in the Ashland, Kentucky area and expand our market presence in Lexington, Kentucky and surrounding areas. The acquisitions also added $362 million in loans and $472 million in deposits to City. Although Poage and Farmers Deposit were only part of our 2018 results for less than a month, we were pleased with their contributions and expect them to contribute approximately $10 million on an after tax basis in 2019. To complete the acquisition of Poage, 1.17 million shares of Company stock were issued, while the Company paid $24.9 million in cash to complete the Farmers Deposit acquisition. Similar to previous acquisitions, the acquisitions of Poage and Farmers Deposit produced a decline in our credit metrics. We have plans in place for our credit and lending teams to workout problem loans and implement our credit culture with new members of our lending team during 2019.”

“In addition to the successful acquisitions in 2018, City also produced positive results in many other ways. Excluding our acquisitions, reported net interest income grew $10.7 million, or 8.5%, due to both improvements in our net interest margin and loan growth, while noninterest income exclusive of security gains and (losses) improved $1.5 million, or 2.6%. We also continued to judiciously manage our capital in 2018. We repurchased 290,000 shares of our common stock during 2018 and repaid our trust preferred securities in December 2018. In addition, City’s Board approved an increase in our quarterly cash dividend to 53 cents per share in the third quarter of 2018 (a 15.2% increase from the dividend paid in the second quarter of 2018). I am incredibly proud of the efforts of our exceptional employees that made 2018 a highly successful year in many ways and look forward to continuing to take advantage of the opportunities in the future.”

Net Interest Income

The Company’s net interest income increased from $126.1 million for the year ended December 31, 2017 to $138.2 million for the year ended December 31, 2018. The Company’s tax equivalent net interest income increased $11.4 million, or 8.9%, from $127.6 million for the year ended December 31, 2017 to $139.0 million for the year ended December 31, 2018. Exclusive of the impact of the acquisitions of Poage and Farmers Deposit, increased yields on commercial and residential real estate loans increased net interest income $7.8 million and $4.8 million, respectively, while higher average balances on commercial loans ($40.0 million) and residential real estate loans ($20.4 million) increased interest income by $1.6 million and $0.8 million, respectively, as compared to the year ended December 31, 2017. In addition, higher average investment balances ($68.6 million) increased investment income by $2.0 million, while interest income from deposits in depository institutions also increased $1.6 million as the Company elected to improve its on-balance sheet liquidity during the year ended December 31, 2018. These increases were partially offset by increased interest expense on interest bearing liabilities ($7.7 million), primarily due to an increase in the cost of funds. The Company’s reported net interest margin increased from 3.46% for the year ended December 31, 2017 to 3.52% for the year ended December 31, 2018. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.49% for the year ended December 31, 2018 and 3.40% for the year ended December 31, 2017.




The Company’s net interest income increased from $35.6 million during the third quarter of 2018 to $36.4 million during the fourth quarter of 2018. During the fourth quarter of 2018, the Company’s tax equivalent net interest income increased $0.9 million, or 2.5%, to $36.6 million from $35.7 million during the third quarter of 2018. The acquisitions of Poage and Farmers Deposit added $1.4 million of net interest income during the quarter ended December 31, 2018. In addition, investment income increased $0.8 million and increased loan yields added $0.5 million to net interest income. These increases were partially offset by lower loan prepayment fees of $1.1 million during the quarter ended December 31, 2018, and increased interest expense of $0.8 million as a result of higher interest rates on interest bearing liabilities. The Company’s reported net interest margin increased from 3.54% for the third quarter of 2018 to 3.55% for the fourth quarter of 2018. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin would have been 3.50% for the quarter ended December 31, 2018 and 3.51% for the quarter ended September 30, 2018.

Credit Quality

The Company’s ratio of nonperforming assets to total loans and other real estate owned increased from 0.45% at December 31, 2017 to 0.54% at December 31, 2018. Total nonperforming assets increased from $14.1 million at December 31, 2017 to $19.4 million at December 31, 2018. Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. Such loans would be considered nonperforming loans if the loan’s performance deteriorates below the Company’s initial expectations. Total past due loans increased from $11.0 million, or 0.35% of total loans outstanding, at December 31, 2017 to $13.1 million, or 0.37% of total loans outstanding, at December 31, 2018. Acquired past due loans from Poage and Farmers Deposit represent approximately 37% of total past dues at December 31, 2018.

As a result of the Company’s quarterly analysis of the adequacy of the Allowance for Loan Losses (“ALLL”), the Company recorded a recovery of loan losses of $0.4 million in the fourth quarter of 2018 and $2.3 million for the year ended December 31, 2018, compared to a provision for loan losses of $0.4 million and $3.0 million for the comparable periods in 2017. During the year ended December 31, 2018, City National Bank of West Virginia ("City National"), the Company’s primary banking subsidiary, liquidated repossessed assets associated with the Kentucky Fuels Corporation credit. As a result of the proceeds from this liquidation, City National recovered $1.3 million related to this credit. Additionally, as a result of this recovery, the historical loss rate used to compute the allowance not specifically allocated to individual credits in the Company's commercial and industrial mining and energy sector (per the North American Industry Classification System ("NAICS")) improved and an additional release of reserve of $1.7 million was recognized during the year ended December 31, 2018. The Company also received a $0.4 million recovery through a settlement from a commercial customer during the quarter ending December 31, 2018. Changes in the amount of the allowance and related provision are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

Non-interest Income

Non-interest income was $60.6 million for 2018 as compared to $63.6 million for 2017. During 2017, the Company realized investment gains of $4.5 million that represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of these gains, non-interest income increased from $59.1 million for the year ended December 31, 2017 to $60.6 million for the year



ended December 31, 2018. This increase was primarily attributable to an increase of $1.2 million, or 7.3%, in bankcard revenues and an increase of $1.1 million, or 4.0%, in service charges. These increases were partially offset by a decrease of $1.1 million in bank owned life insurance revenues due to lower death benefit proceeds received during 2018 compared to 2017.

Non-interest income was $14.7 million during the quarter ended December 31, 2018 as compared to $15.6 million during the quarter ended December 31, 2017. During the fourth quarter of 2017, the Company realized investment gains of $0.2 million which represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of this gain, non-interest income decreased from $15.4 million for the fourth quarter of 2017 to $14.7 million for the fourth quarter of 2018. This decrease was mainly due to unrealized fair value losses on the Company’s equity securities of $1.2 million during the fourth quarter of 2018 and a decrease of $0.5 million in bank owned life insurance revenues due to lower death benefit proceeds from the fourth quarter of 2017. These decreases were partially offset by an increase of $0.6 million, or 7.7%, in service charges and an increase of $0.5 million, or 11.8%, in bankcard revenues from the fourth quarter of 2017.

Non-interest Expenses

During 2018, the Company recognized $13.3 million of acquisition and integration expenses associated with the completed acquisitions of Poage and Farmers Deposit. Excluding these expenses, non-interest expenses increased from $96.0 million for 2017 to $99.8 million for 2018. This increase was primarily due to an increase in salaries and employee benefits of $3.4 million that was largely attributable to annual salary adjustments, including an adjustment to wages for approximately 50% of the Company’s employees late in the first quarter of 2018 to make salaries more competitive in the current employment environment. Additionally, the Company experienced increases in bankcard expenses of $0.6 million and other expenses of $0.4 million.

During the quarter ended December 31, 2018, the Company recognized $13.0 million of acquisition and integration expenses associated with the completed acquisitions of Poage and Farmers Deposit. Excluding these expenses, non-interest expenses increased $2.3 million from $22.9 million in the quarter ended December 31, 2017 to $25.2 million in the quarter ended December 31, 2018. This increase was primarily due to an increase in salaries and employee benefits of $2.2 million due to annual salary adjustments and an increase in bankcard expenses of $0.3 million.

Balance Sheet Trends

For the year ending December 31, 2018, period end loan balances increased $459.7 million (14.7%) to $3.59 billion, primarily due to the Company’s acquisitions of Poage and Farmers Deposit ($304.0 million and $57.9 million, respectively). Excluding these acquisitions, loans increased $98.4 million (3.1%) from December 31, 2017 to $3.23 billion at December 31, 2018. Commercial loans increased $57.2 million (3.9%) and residential real estate loans increased $32.7 million (2.2%) from December 31, 2017 to December 31, 2018.

Total average depository balances increased $161.9 million, or 4.9%, from the year ended December 31, 2017 to the year ended December 31, 2018. This growth was partially attributable to deposits acquired from Poage and Farmers Deposit ($379.3 million and $92.2 million, respectively). Exclusive of these contributions, the Company experienced increases in interest bearing deposits ($81.8 million) and time deposits ($63.7 million) that were partially offset by a decrease in savings deposits ($19.8 million).

Income Tax Expense




The Company’s effective income tax rate for the quarter and year ended December 31, 2018 was 19.8% and 20.5%, respectively, compared to 60.8% and 40.2% for the comparable periods in 2017. On December 22, 2017, the President signed the TCJA into law. Among other things, the Tax Cuts and Jobs Act (“TCJA”) reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax rate, the Company reassessed its deferred tax assets and liabilities, which resulted in a charge to earnings in the fourth quarter of 2017 of $7.1 million. In addition, during the years ended December 31, 2018 and December 31, 2017, the Company reduced income tax expense by $0.4 million and $0.3 million, respectively, due to the recognition of previously unrecognized tax positions subsequent to the close of the statute of limitations for previous tax years. Exclusive of these items, the Company’s tax rate from operations was 22.8% and 20.9% for the quarter and year ended December 31, 2018, respectively, compared to 33.4% and 32.7% for the comparable periods in 2017.

Capitalization and Liquidity

The Company’s loan to deposit ratio was 90.2% and the loan to asset ratio was 73.2% at December 31, 2018. The Company maintained investment securities totaling 16.6% of assets as of the same date. The Company’s deposit mix is weighted toward checking and saving accounts that fund 53.5% of assets at December 31, 2018. Time deposits fund 27.6% of assets at December 31, 2018, but very few of these deposits are in accounts that have balances of more than $250,000.

The Company continues to be strongly capitalized. While the Company completed the acquisitions of both Poage and Farmers Deposit in December 2018, the Company’s tangible equity ratio only decreased from 10.5% at December 31, 2017 to 10.0% at December 31, 2018. At December 31, 2018, City National Bank’s Leverage Ratio was 9.81%, its Common Equity Tier I ratio was 13.05%, its Tier I Capital ratio was 13.05%, and its Total Risk-Based Capital ratio was 13.55%. These regulatory capital ratios are significantly above levels required to be considered “well capitalized,” which is the highest possible regulatory designation.

On December 19, 2018, the Board approved a quarterly cash dividend of $0.53 cents per share payable January 31, 2019, to shareholders of record as of January 15, 2019. During the quarter ended December 31, 2018, the Company repurchased 69,000 common shares at a weighted average price of $72.89 per share as part of a one million share repurchase plan authorized by the Board of Directors in September 2014. During the year ended December 31, 2018, the Company repurchased 290,000 common shares at a weighted average price of $69.78 per share. As of December 31, 2018, the Company could repurchase approximately 112,000 shares under the current plan.

City Holding Company is the parent company of City National Bank of West Virginia. City National Bank operates 100 branches across West Virginia, Virginia, Kentucky and Ohio. During the first quarter of 2019, City National Bank has plans in place to reduce its branches by four through the consolidation of branches that overlap due to the recently completed acquisition of Poage.

Forward-Looking Information

This news release contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of



customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (12) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (13) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; (14) the expected cost savings and any revenue synergies from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may not be fully realized within the expected time frames; (15) the disruption from the merger of City Holding Company, City National Bank of West Virginia, Poage Bankshares, Inc., Town Square Bank, Farmers Deposit Bancorp, Inc. and Farmers Deposit Bank may make it more difficult to maintain relationships with clients, associates, or suppliers; and (16) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “ITEM 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. Further, the Company is required to evaluate subsequent events through the filing of its Form 10-K for the fiscal year ended December 31, 2018. The Company will continue to evaluate the impact of any subsequent events on the preliminary December 31, 2018 results and will adjust the amounts if necessary.







CITY HOLDING COMPANY AND SUBSIDIARIES
Financial Highlights
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,September 30,June 30,March 31,December 31,December 31,December 31,
2018201820182018201720182017
Earnings
Net Interest Income (FTE)$36,625 $35,745 $33,760 $32,834 $32,760 $138,965 $127,582 
Net Income available to common shareholders10,713 20,692 20,979 17,616 9,669 70,002 54,310 
Per Share Data
Earnings per share available to common shareholders:
Basic$0.68 $1.34 $1.36 $1.13 $0.62 $4.50 $3.49 
Diluted0.68 1.33 1.35 1.13 0.62 4.49 3.48 
Weighted average number of shares:
Basic15,603 15,340 15,326 15,414 15,472 15,421 15,412 
Diluted15,618 15,358 15,345 15,436 15,497 15,439 15,436 
Period-end number of shares16,555 15,449 15,452 15,439 15,618 16,555 15,618 
Cash dividends declared$0.53 $0.53 $0.46 $0.46 $0.46 $1.98 $1.78 
Book value per share (period-end)36.46 33.14 32.6 31.86 32.17 36.46 32.17 
Tangible book value per share (period-end)28.88 28.08 27.53 26.78 27.14 28.88 27.14 
Market data:
High closing price$77.94 $82.79 $78.44 $72.87 $73.98 $82.79 $73.98 
Low closing price66.36 75.54 67.95 65.03 65.50 65.03 59.94 
Period-end closing price67.59 76.8 75.23 68.56 67.47 67.59 67.47 
Average daily volume66 54 60 56 66 59 58 
Treasury share activity:
Treasury shares repurchased69 10 204 — 290 — 
Average treasury share repurchase price
$72.89 $77.18 $69.26 $68.50 $— $69.78 $— 
Common share issuance:
Common shares issued (in thousands)
— — — — — — 441 
Average common share issue price (a)
$— $— $— $— $— $— $64.48 
Key Ratios (percent)
Return on average assets0.96 %1.90 %2.00 %1.69 %0.94 %1.63 %1.33 %
Return on average tangible equity9.60 %18.90 %19.90 %16.70 %9.00 %16.20 %13.10 %
Yield on interest earning assets4.32 %4.25 %4.15 %4.05 %3.95 %4.18 %3.91 %
Cost of interest bearing liabilities1.00 %0.92 %0.76 %0.69 %0.64 %0.85 %0.59 %
Net Interest Margin3.55 %3.54 %3.52 %3.51 %3.46 %3.52 %3.46 %



Non-interest income as a percent of total revenue28.80 %30.70 %31.70 %30.70 %32.20 %30.50 %31.90 %
Efficiency Ratio (a)49.00 %48.60 %50.40 %52.60 %47.70 %50.00 %51.50 %
Price/Earnings Ratio (b)24.82 14.37 13.88 15.17 27.30 15.03 19.36 
Capital (period-end)
Average Shareholders' Equity to Average Assets12.05 %11.81 %11.88 %12.05 %12.34 %
Tangible equity to tangible assets10.01 %9.99 %9.90 %10.03 %10.45 %
Consolidated City Holding Company risk based capital ratios (c):
CET I15.07 %15.94 %15.49 %15.08 %15.10 %
Tier I15.20 %16.49 %16.05 %15.64 %15.66 %
Total15.69 %17.08 %16.65 %16.31 %16.34 %
Leverage11.36 %11.01 %11.13 %10.90 %11.00 %
City National Bank risk based capital ratios (c):
CET I13.05 %14.00 %13.26 %12.59 %11.93 %
Tier I13.05 %14.00 %13.26 %12.59 %11.93 %
Total13.55 %14.59 %13.87 %13.25 %12.61 %
Leverage9.81 %9.39 %9.24 %8.81 %8.43 %
Other
Branches100 87 86 86 86 
FTE891 846 849 832 839 
Assets per FTE$5,500 $5,226 $5,152 $5,048 $4,925 
Deposits per FTE4,462 4,070 4,030 4,143 3,952 
(a) The common share issue price is presented net of commissions and excludes one-time offering costs.
(b) The price/earnings ratio is computed based on annualized quarterly earnings.
(c) December 31, 2018 risk-based capital ratios are estimated.





CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited) ($ in 000s, except per share data)
Three Months EndedTwelve Months Ended
December 31,September 30,June 30,March 31,December 31,December 31,December 31,
2018201820182018201720182017
Interest Income
Interest and fees on loans$37,973 $36,872 $34,292 $32,918 $32,529 $142,055 $125,752 
Interest on investment securities:
Taxable5,023 4,216 4,117 3,981 3,797 17,337 14,387 
Tax-exempt729 701 710 703 692 2,843 2,706 
Interest on deposits in depository institutions
623 940 61 42 35 1,666 85 
Total Interest Income44,348 42,729 39,180 37,644 37,053 163,901 142,930 
Interest Expense
Interest on deposits6,656 5,497 4,918 4,326 3,941 21,397 14,826 
Interest on short-term borrowings
1,061 1435 459 460 522 3,415 1214 
Interest on long-term debt200 239 230 211 201 880 765 
Total Interest Expense7,917 7,171 5,607 4,997 4,664 25,692 16,805 
Net Interest Income36,431 35,558 33,573 32,647 32,389 138,209 126,125 
(Recovery of) provision for loan losses
(400)(27)(2064)181 422 (2,310)3,006 
Net Interest Income After (Recovery of) Provision for Loan Losses36,831 35,585 35,637 32,466 31,967 140,519 123,119 
Non-Interest Income
 Net gains (losses) on sale of investment securities
— — — — 200 — 4,476 
 Unrealized gains (losses) recognized on securities still held
(1,246)384 492 280 — (90)— 
Service charges7,921 7,598 7,323 6,862 7,355 29,704 28,574 
Bankcard revenue4,826 4,677 4,532 4,334 4,316 18,369 17,120 
Trust and investment management fee income
1,737 1,579 1,645 1,568 1,800 6,529 6,269 
Bank owned life insurance734 813 722 821 1241 3,090 4,212 
Other income734 702 897 627 655 2,962 2,956 
Total Non-Interest Income14,706 15,753 15,611 14,492 15,567 60,564 63,607 
Non-Interest Expense
Salaries and employee benefits14,017 13,576 13,551 13,241 11,845 54,385 51,014 
Occupancy related expense2,250 2,323 2,346 2,404 2,195 9,323 9,557 
Equipment and software related expense
2,038 1,965 1,895 1,831 1,897 7,729 7,732 
FDIC insurance expense308 315 313 315 318 1251 1,348 
Advertising530 808 849 787 711 2,974 2,914 
Bankcard expenses1,229 1,134 1,064 1076 960 4,503 3,924 



Postage, delivery, and statement mailings
527 537 515 578 518 2,157 2,094 
Office supplies313 364 329 313 355 1,319 1,437 
Legal and professional fees469 453 475 450 563 1,847 1,956 
Telecommunications401 408 441 500 517 1,750 1,988 
Repossessed asset losses, net of expenses
207 156 112 370 145 845 735 
Merger related expenses13,015 242 — — — 13,257 — 
Other expenses2,874 2,759 3,021 3,072 2,869 11,726 11,282 
Total Non-Interest Expense38,178 25,040 24,911 24,937 22,893 113,066 95,981 
Income Before Income Taxes13,359 26,298 26,337 22,021 24,641 88,017 90,745 
Income tax expense2,646 5,606 5,358 4,405 14,972 18,015 36,435 
Net Income Available to Common Shareholders$10,713 $20,692 $20,979 $17,616 $9,669 $70,002 $54,310 
Distributed earnings allocated to common shareholders$8,695 $8,109 $7,039 $7,023 $7,106 $32,483 $27,497 
Undistributed earnings allocated to common shareholders1,928 12,382 13,729 10,398 2,454 36,865 26,222 
Net earnings allocated to common shareholders$10,623 $20,491 $20,768 $17,421 $9,560 $69,348 $53,719 
Average common shares outstanding15,603 15,340 15,326 15,414 15,472 15,421 15,412 
Shares for diluted earnings per share15,618 15,358 15,345 15,436 15,497 15,439 15,436 
Basic earnings per common share$0.68 $1.34 $1.36 $1.13 $0.62 $4.50 $3.49 
Diluted earnings per common share$0.68 $1.33 $1.35 $1.13 $0.62 $4.49 $3.48 




CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
($ in 000s)
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
December 31,September 30,June 30,March 31,December 31,
20182018201820182017
Assets
Cash and due from banks$55,016 $49,806 $43,466 $39,340 $54,450 
Interest-bearing deposits in depository institutions67,975 256,104 222,058 84,438 28,058 
Cash and cash equivalents122,991 305,910 265,524 123,778 82,508 
Investment securities available-for-sale, at fair value723,254 563,003 552,603 545,628 550,389 
Investment securities held-to-maturity, at amortized cost60,827 57,812 60,030 62,277 64,449 
Other securities28,810 28,875 28,920 22,165 14,147 
Total investment securities812,891 649,690 641,553 630,070 628,985 
Gross loans3,587,081 3,146,697 3,155,468 3,137,681 3,127,410 
Allowance for loan losses(15,966)(16,311)(16,876)(18,381)(18,836)
Net loans3,571,115 3,130,386 3,138,592 3,119,300 3,108,574 
Bank owned life insurance113,544 105,372 104,773 104,052 103,440 
Premises and equipment, net78,383 72,484 72,482 72,920 72,682 
Accrued interest receivable12,424 11,449 9,348 9,528 9,223 
Net deferred tax assets17,122 15,653 14,528 14,467 11,913 
Intangible assets125,504 78,215 78,342 78,468 78,595 
Other assets46,951 51,643 49,241 47,432 36,361 
Total Assets$4,900,925 $4,420,802 $4,374,383 $4,200,015 $4,132,281 
Liabilities
Deposits:
Noninterest-bearing$789,119 $672,042 $684,614 $703,209 $666,639 
Interest-bearing:
Demand deposits899,568 802,490 785,933 816,976 769,245 
Savings deposits934,218 821,390 817,547 816,245 796,275 
Time deposits1,352,654 1,147,709 1,133,684 1,110,532 1,083,475 
Total deposits3,975,559 3,443,631 3,421,778 3,446,962 3,315,634 
Short-term borrowings
Federal Funds purchased40,000 170,000 181375 — 54,000 
Customer repurchase agreements221,911 220,124 196,635 195,375 198,219 
Long-term debt4,053 16,495 16,495 16,495 16,495 
Other liabilities55,797 58,526 54,346 49,306 45,426 
Total Liabilities4,297,320 3,908,776 3,870,629 3,708,138 3,629,774 



Stockholders' Equity
Preferred stock— — — — — 
Common stock47,619 47,619 47,619 47,619 47,619 
Capital surplus170,790 140,450 140,091 140,547 140,960 
Retained earnings485,967 484,017 471,515 457,650 444,481 
Cost of common stock in treasury(87,002)(136,783)(136,520)(137,420)(124,909)
Accumulated other comprehensive loss:
Unrealized gain (loss) on securities available-for-sale
(8,611)(18,244)(13,918)(11486)(611)
Underfunded pension liability(5,158)(5,033)(5,033)(5,033)(5,033)
Total Accumulated Other Comprehensive Loss(13,769)(23,277)(18,951)(16,519)(5,644)
Total Stockholders' Equity603,605 512,026 503,754 491,877 502,507 
Total Liabilities and Stockholders' Equity$4,900,925 $4,420,802 $4,374,383 $4,200,015 $4,132,281 
Regulatory Capital
Total CET 1 capital$492,526 $457,580 $444,869 $430,044 $430,154 
Total tier 1 capital496,526 473,580 460,869 446,044 446,154 
Total risk-based capital512,801 490,307 478,255 464,936 465,292 
Total risk-weighted assets3,267,357 2,871,241 2,871,561 2,851,330 2,842,453 





CITY HOLDING COMPANY AND SUBSIDIARIES
Loan Portfolio
(Unaudited) ($ in 000s)
December 31,September 30,June 30,March 31,December 31,
20182018201820182017
Residential real estate (1)
$1,657,306 $1,485,823 $1,472,916 $1,465,215 $1,468,278 
Home equity - junior liens153,273 143,540 139,245 138,477 139,499 
Commercial and industrial286,395 213,815 213,687 204,592 208,484 
Commercial real estate (2)
1,432,492 1,268,052 1,294,489 1,296,304 1,277,576 
Consumer51,287 31,869 31,137 29,570 29,162 
DDA overdrafts6,328 3,598 3,994 3,523 4,411 
Gross Loans$3,587,081 $3,146,697 $3,155,468 $3,137,681 $3,127,410 
Construction loans included in:
(1) - Residential real estate loans$21,834 $17,628 $21,662 $26,610 $25,270 
(2) - Commercial real estate loans37,869 24,110 28,567 30,857 28,871 
Secondary Mortgage Loan Activity
Mortgage loans originated$5,910 $3,417 $3,263 $2,606 $2,593 
Mortgage loans sold4,392 3,590 3,137 2,874 2,975 
Mortgage loans gain on loans sold102 86 84 79 79 




CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information
(Unaudited) ($ in 000s)

Three Months EndedTwelve Months Ended
December 31,September 30,June 30,March 31,December 31,December 31,December 31,
2018201820182018201720182017
Allowance for Loan Losses
Balance at beginning of period$16,311 $16,876 $18,381 $18,836 $19,554 $18,836 $19,730 
Charge-offs:
Commercial and industrial(9)— (385)(339)(250)(733)(400)
Commercial real estate(20)(74)(118)(157)(156)(369)(720)
Residential real estate(218)(244)(96)(124)(342)(682)(1,637)
Home equity— (108)(33)(78)(147)(219)(403)
Consumer(209)(206)(255)(99)(13)(769)(60)
DDA overdrafts(725)(704)(636)(636)(725)(2,701)(2,714)
Total charge-offs(1,181)(1,336)(1,523)(1,433)(1,633)(5,473)(5,934)
Recoveries:
Commercial and industrial528 147 1476 2,153 58 
Commercial real estate194 166 149 223 20 732 112 
Residential real estate92 116 53 106 367 294 
Home equity— — — — — — 45 
Consumer36 25 59 46 17 166 63 
DDA overdrafts386 344 345 420 447 1,495 1,463 
Total recoveries1236 798 2082 797 493 4,913 2,035 
Net charge-offs55 (538)559 (636)(1140)(560)(3,899)
Provision for (recovery of) acquired loans— (27)(13)— 122 (40)161 
Provision for loan losses(400)— (2051)181 300 (2,270)2,845 
Balance at end of period$15,966 $16,311 $16,876 $18,381 $18,836 $15,966 $18,836 
Loans outstanding$3,587,081 $3,146,697 $3,155,468 $3,137,681 $3,127,410 
Allowance as a percent of loans outstanding0.45 %0.52 %0.53 %0.59 %0.60 %
Allowance as a percent of non-performing loans107.8 %142.1 %127.6 %189.9 %178.4 %
Average loans outstanding$3,252,934 $3,149,320 $3,138,146 $3,133,804 $3,110,084 $3,168,825 $3,082,448 
Net charge-offs (annualized) as a percent of average loans outstanding(0.01)%0.07 %(0.07)%0.08 %0.15 %0.02 %0.13 %








CITY HOLDING COMPANY AND SUBSIDIARIES
Asset Quality Information, Continued
(Unaudited) ($ in 000s)
December 31,September 30,June 30,March 31,December 31,
20182018201820182017
Nonaccrual Loans
Residential real estate$4,275 $3,029 $3,783 $3,331 $2,814 
Home equity138 — 168 135 168 
Commercial and industrial1676 818 863 1,063 1,345 
Commercial real estate8,461 7,599 7,707 5,061 5,970 
Consumer557 — — 
Total nonaccrual loans14,551 11,447 13,078 9,590 10,297 
Accruing loans past due 90 days or more257 35 145 91 262 
Total non-performing loans14,808 11,482 13,223 9,681 10,559 
Other real estate owned4,608 4,259 3,636 3,912 3,585 
Total non-performing assets$19,416 $15,741 $16,859 $13,593 $14,144 
Non-performing assets as a percent of loans and other real estate owned0.54 %0.50 %0.53 %0.43 %0.45 %
Past Due Loans
Residential real estate$9,991 $4,657 $5,998 $5,641 $6,718 
Home equity1275 468 583 616 851 
Commercial and industrial497 187 624 61 692 
Commercial real estate585 934 402 1,520 2086 
Consumer295 39 34 21 42 
DDA overdrafts488 582 525 432 575 
Total past due loans$13,131 $6,867 $8,166 $8,291 $10,964 
Total past due loans as a percent of loans outstanding0.37 %0.22 %0.26 %0.26 %0.35 %
Troubled Debt Restructurings ("TDRs") (period-end)
Accruing:
Residential real estate$22,863 $20,414 $20,424 $20,786 $21,005 
Home equity3,025 2,941 3,156 3,015 3,047 
Commercial and industrial98 108 119 125 135 
Commercial real estate8,205 8,231 8,279 8,324 8,381 
Consumer— — — — — 
Total accruing TDRs$34,191 $31,694 $31,978 $32,250 $32,568 




Non-Accruing
Residential real estate$658 $175 307 $256 $84 
Home equity— 40 40 50 
Commercial and industrial— — — — — 
Commercial real estate— — — — — 
Consumer— — — — — 
Total non-accruing TDRs$663 $175 $347 $296 $134 
Total TDRs$34,854 $31,869 $32,325 $32,546 $32,702 





CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)

Three Months Ended
December 31, 2018September 30, 2018December 31, 2017
AverageYield/AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRateBalanceInterestRate
Assets:
Loan portfolio (1):
Residential real estate (2)
$1,683,389 $18,681 4.40 %$1,618,829 $17,653 4.33 %$1,608,509 $16,321 4.03 %
Commercial, financial, and agriculture (2)
1,526,651 18,335 4.76 %1,494,666 18,460 4.90 %1,468,701 15,360 4.15 %
Installment loans to individuals (2), (3)
42,894 745 6.89 %35,825 584 6.47 %32,874 588 7.10 %
Previously securitized loans (4)
*** 212  *** *** 175  *** *** 260  ***
Total loans3,252,934 37,973 4.63 %3,149,320 36,872 4.64 %3,110,084 32,529 4.15 %
Securities:   
Taxable602,966 5,023 3.31 %554,157 4,216 3.02 %526,645 3,797 2.86 %
Tax-exempt (5)
92,833 922 3.94 %90,596 888 3.89 %91,886 1,064 4.59 %
Total securities695,799 5,945 3.39 %644,753 5,104 3.14 %618,531 4,861 3.12 %
Deposits in depository institutions141,246 623 1.75 %210,994 940 1.77 %31,060 35 0.45 %
Total interest-earning assets4,089,979 44,541 4.32 %4,005,067 42,916 4.25 %3,759,675 37,425 3.95 %
Cash and due from banks54,367 49,933 65,636 
Premises and equipment, net74,430 72,733 73,109 
Goodwill and intangible assets93,096 78,294 78,679 
Other assets181,246 178,540 169,008 
Less: Allowance for loan losses(16,780)(17,247)(20,981)
Total assets$4,476,338 $4,367,320 $4,125,126 
Liabilities:
Interest-bearing demand deposits$822,087 $787 0.38 %$778,639 $526 0.27 %$702,614 $167 0.09 %
Savings deposits846,162 802 0.38 %816,597 537 0.26 %797,311 313 0.16 %
Time deposits (2)
1,208,415 5,067 1.66 %1,141,461 4,434 1.54 %1,079,179 3,462 1.27 %
Short-term borrowings263,022 1,060 1.60 %350,832 1435 1.62 %296,139 522 0.70 %
Long-term debt14,743 200 5.38 %16,495 239 5.75 %16,495 201 4.83 %
Total interest-bearing liabilities3,154,429 7,916 1.00 %3,104,024 7,171 0.92 %2,891,738 4,665 0.64 %
Noninterest-bearing demand deposits734,066 697,485 681,554 
Other liabilities48,543  50,093  42,896  
Stockholders' equity539,300 515,718 508,938 
Total liabilities and
stockholders' equity$4,476,338 $4,367,320 $4,125,126 
Net interest income$36,625 $35,745 $32,760 
Net yield on earning assets3.55 %3.54 %3.46 %
(1) For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
Loan fees$221 $1,365 $175 



(2) Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings Bancorp ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Banks, Inc. ("AFB"):
Residential real estate$57 $110 $126 
Commercial, financial, and agriculture449 157 438 
Installment loans to individuals27 
$508 $270 $591 
(3) Includes the Company’s consumer and DDA overdrafts loan categories.
(4) Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(5) Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21% for the periods ending December 31, 2018 & September 30, 2018 and 35% for the period ending December 31, 2017.




CITY HOLDING COMPANY AND SUBSIDIARIES
Consolidated Average Balance Sheets, Yields, and Rates
(Unaudited) ($ in 000s)

Twelve Months Ended
December 31, 2018December 31, 2017
AverageYield/AverageYield/
BalanceInterestRateBalanceInterestRate
Assets:
Loan portfolio (1):
Residential real estate (2)
$1,629,950 $69,765 4.28 %$1,598,579 $63,649 3.98 %
Commercial, financial, and agriculture (2)
1,501,665 68,981 4.59 %1,450,144 58,482 4.03 %
Installment loans to individuals (2), (3)
37,210 2,349 6.31 %33,725 2,275 6.75 %
Previously securitized loans (4)
*** 960  *** *** 1,346  ***
Total loans3,168,825 142,055 4.48 %3,082,448 125,752 4.08 %
Securities:  
Taxable559,125 17,337 3.1 %492,783 14,387 2.92 %
Tax-exempt (5)
91,572 3,598 3.93 %89,341 4,163 4.66 %
Total securities650,697 20,935 3.22 %582,124 18,550 3.19 %
Deposits in depository institutions122,761 1,666 1.36 %27,142 85 0.31 %
Total interest-earning assets3,942,283 164,656 4.18 %3,691,714 144,387 3.91 %
Cash and due from banks47,562 85,473 
Premises and equipment, net73,196 73,540 
Goodwill and intangible assets82,119 78,881 
Other assets176,109 170,312 
Less: Allowance for loan losses(17,906)(20,246)
Total assets$4,303,363 $4,079,674 
Liabilities:
Interest-bearing demand deposits$792,765 $2,114 0.27 %$705,412 $643 0.09 %
Savings deposits820,474 2,133 0.26 %832,512 1311 0.16 %
Time deposits (2)
1,142,629 17,149 1.5 %1,067,181 12,872 1.21 %
Short-term borrowings265,157 3,415 1.29 %230,529 1214 0.53 %
Long-term debt16,053 880 5.48 %16,495 765 4.64 %
Total interest-bearing liabilities3,037,078 25,691 0.85 %2,852,129 16,805 0.59 %
Noninterest-bearing demand deposits704,438 693,280 
Other liabilities